The owners of Ansbacher Cayman have made a €7.5 million settlement with the Revenue Commissioners, but still insist that the bank had no tax liability arising from business conducted here.

The settlement compares with a figure of "up to €100 million" that an informed source last year told The Irish Times could be at issue in the dispute between Ansbacher and the Revenue.

It is understood no official assessment was ever issued against the bank.

The Revenue sent tax returns to the Cayman bank last year inviting it to declare liabilities going back to the 1970s.

The returns are not thought to have been filled in by the bank.

The tax at issue was corporation tax and tax on interest earned on money on deposit, over a period of more than 20 years.

The settlement announced yesterday by Ansbacher's parent, FirstRand, of South Africa, to the South African stock exchange, was agreed in December 2003 as a full and final settlement of the dispute. The settlement did not involve either side accepting the other side's view.

Revenue argued that Ansbacher had a tax debt arising from business it conducted here, while the bank said it believed it had no liability.

In their report the High Court inspectors appointed to Ansbacher found that Ansbacher had "established a business" in this jurisdiction in the early 1970s in Guinness & Mahon bank in Dublin, and later in the Fitzwilliam Square, Dublin, premises of CRH plc.

The inspectors also found that there was evidence "tending to show" that Ansbacher failed to pay corporation tax lawfully due.

Furthermore, under Section 31 of the Finance Act, 1974, the bank may have had an obligation to withhold some of the annual interest it paid to its customers

The Revenue would have sought interest and penalties on top of any tax it was arguing was due from the period 1970 to approximately 1997. The €7.5 million settlement is not a tax settlement made up of tax and interest, but rather a figure agreed between the two sides to settle the matter.

A spokesman for the Revenue said the settlement had no implications for its continuing pursuit of other tax debts it believes are due from Irish customers of Ansbacher.

He said the settlement followed "detailed discussions with the bank against a background of unusual circumstances and potentially protracted litigation with an uncertain outcome".

Ansbacher has no assets in this jurisdiction.

Ansbacher Cayman is part of the Ansbacher group, which is in turn owned by the South African FirstRand group. The Ansbacher group is currently for sale and the settlement of the dispute with the Revenue will be of assistance in that regard.

Mr Richard Spilg, chief executive of the Ansbacher group, said the bank's position had always been, and remained, that it did not have any liability to Irish tax. "It was, however, recognised that the Irish revenue took a contrary view."

Mr Laurie Dippenaar, chief executive of FirstRand, said an enormous amount of management time had been expended over many years on the Ansbacher scandal, "involving significant costs already running to several million euro.

"In addition, constant speculation in the press that FirstRand would face significant tax liabilities creates potential reputational damage for the group and uncertainty for our shareholders."

He said that although he believed the bank would have won in the courts, he had been advised that the legal costs from the dispute, that would have gone on for probably a further five years, would be considerable. Also the matter would have eaten up considerable management time. "Therefore we have decided to take a reduced level of cost on the chin now, through this settlement, so that Ansbacher and FirstRand can put this issue behind them and move on."